1st Source Corporation reported second quarter 2025 earnings per share (GAAP) of $1.51, surpassing analyst expectations of $1.47. Net interest income (GAAP) increased to $85.19 million, marking a 15.0% rise from the second quarter of 2024. The net interest margin improved to 4.01% compared to the previous quarter, driven by higher loan balances and better yields on investment assets.
The company's average loans and leases grew by 5.48% year-over-year to $6.97 billion, with expansion concentrated in Commercial and Agricultural, Renewable Energy, and Construction Equipment portfolios. Noninterest income remained largely flat at $23.06 million compared to Q2 2024, impacted by $1.00 million in pre-tax losses from securities sales during a strategic portfolio repositioning.
Credit quality metrics showed an increase in the provision for credit losses (GAAP) to $7.69 million, more than doubling from $3.27 million in Q1 2025. Net charge-offs rose to $1.87 million, and nonperforming assets as a share of loans and leases jumped to 1.06%, primarily due to a single troubled relationship in the auto and light truck segment. The allowance for loan and lease losses climbed to $163.48 million, or 2.30% of total loans and leases. The quarterly dividend was raised 5.6% to $0.38 per share.
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